China’s Mobile Payment Firms See Opportunity, Obstacles

Mobile phone payment providers may see the coming launch of next-generation phones in China as a market-expanding opportunity, but obstacles still mean mobile payments are not guaranteed to take off. Many online payment providers in China have started offering mobile payments in competition with rising mobile-only payment providers. But while the industry’s potential is giant in a country with over 640 million mobile subscribers, for now it faces checkered availability of matching pay platforms and phones to support them.

Providers must also reach separate agreements with banks, merchants and mobile carriers in each of China’s segmented provinces to launch mobile payments in them. The ominous task has hamstrung growth, said Boaz Rottenberg, an analyst at Beijing-based Maverick China Research.

“People have been talking about mobile payment for quite some time now, but it still hasn’t taken off,” Rottenberg said. “Market conditions are just not right.”

That hasn’t stopped Union Mobile Pay (UMPay), China’s biggest mobile payment provider, from diving into the market. As a joint venture between China UnionPay, an inter-bank credit card organization, and China Mobile, the world’s biggest mobile carrier, UMPay says its main mobile payment service has gained over 40 million registered users since the firm launched five years ago.